Exhibit 2.1
Amendment No. 1
Dated as of August 5, 2002
to the Stock Purchase Agreement among HX Investors, L.P., Exeter Capital
Corporation and Shelbourne Properties III, Inc., dated as of July 1, 2002
Amendment No. 1, dated as of August 5, 2002 (the "Amendment"), to the
Stock Purchase Agreement, dated as of July 1, 2002 (the "Stock Purchase
Agreement"), among HX Investors, L.P. ("Purchaser"), Exeter Capital Corporation
("Exeter") and Shelbourne Properties III, Inc. (the "Company").
WHEREAS, Purchaser, Exeter and the Company are parties to the Stock
Purchase Agreement (capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Stock Purchase Agreement); and
WHEREAS, Purchaser, Exeter and the Company desire to amend the Stock
Purchase Agreement as described herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Purchaser, Exeter and the Company hereby agree as follows:
1. Per Share Amount. From and after the date hereof, the definition of
"Per Share Amount" in the Stock Purchase Agreement shall be amended to be
"$58.30" per Share.
2. Further Action; All Reasonable Efforts. From and after the date
hereof, Section 6.06 of the Stock Purchase Agreement shall be amended to add the
following clause (c) at the end thereof:
"(c) Purchaser agrees that for so long as its nominees (or persons
nominated or approved by such nominees) constitute (i) a majority of the
Board or (ii) with respect to any specific matter submitted to the Board
for action or vote, a majority of the directors entitled or available to
vote on or not disqualified from voting on such matter, Purchaser will
reimburse the Company and any plaintiffs in the event of litigation seeking
performance of the terms of this Agreement (including, without limitation,
the Plan of Liquidation) if (x) such party prevails in such litigation and
(y) it is determined pursuant to a final nonappealable judgment that the
Company failed to fulfill a material obligation hereunder. Purchaser
acknowledges and agrees that specific performance is a proper remedy to be
sought in any such litigation."
3. Fees and Expenses. From and after the date hereof, the fee
referenced in Section 7.03(b) of the Stock Purchase Agreement shall be
"$630,000."
4. Corporate Governance Provisions. From and after the date hereof, the
Corporate Governance Provisions attached as Annex B to the Stock Purchase
Agreement (the "Corporate Governance Provisions") shall be amended as follows:
(a) The second sentence of Section 3(a) of the Corporate Governance
Provisions shall be amended and restated in its entirety to read as follows:
"For the purposes of this Agreement, "Independent Director" shall mean a
person who (i) is not an officer, director, security holder or employee of
Purchaser or one of its affiliates, or a relative of such person, (ii) does
not have any prior or current affiliation with the executive officers of
the Company, Purchaser or their respective affiliates or (iii) has not
served and is not serving along with any other director of the Company on
the board of directors of another public company."
(b) Section 4 of the Corporate Governance Provisions shall be amended
to add the following clause (d) at the end thereof:
"(d) If the Plan of Liquidation is not approved by the Stockholders at
the Stockholders' Meeting (or any postponement or adjournment thereof), the
Board will, subject to its fiduciary duties under applicable Law, use
commercially reasonable efforts to market and sell the Company's property
located at 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx and to distribute the proceeds
from such sale to the Stockholders by the earlier of (i) 30 days following
the end of the fiscal quarter in which such sale occurs and (ii) 90 days
following the date of such sale."
(c) Section 11 of the Corporate Governance Provisions shall be
renumbered as Section 12, and the following shall be added as a new Section 11:
"11. Distributions. (a) Purchaser's nominees to the Board who
are not Independent Directors will, subject to their fiduciary duties and
existing obligations of the Company, recommend to the Board and support the
implementation of the following distribution policy:
(i) The Company will make quarterly distributions of all
operating cash flow in excess of budgeted capital expenditures,
anticipated corporate expenses and a reserve of 2% of the current
appraised value of the Company's properties; and
(ii) 80% of the Company's current excess net cash will
be used to retire existing debt and/or to make a distribution to the
Stockholders within 90 days of the appointment or election to the
Board of Purchaser's nominees for director.
(b) If Stockholders have failed to receive aggregate distributions on
a per share basis equal to $44.00 by December 31, 2004, then Purchaser
shall (i) endeavor to cause the next annual meeting of Stockholders to be
held no later than May 30, 2005 and (ii) vote or cause to be voted all
shares of Common Stock beneficially owned by
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Purchaser in proportion to the votes cast by the other holders of Common
Stock on all matters properly brought before such meeting.
5. Plan of Liquidation. From and after the date hereof, the Plan of
Liquidation shall be amended as follows:
(a) Section 3 of the Plan of Liquidation shall be amended by adding the
following sentence at the end thereof:
"If the Plan of Liquidation is approved and the assets of the Company are
not fully liquidated by October 31, 2007, Purchaser will vote or cause to
be voted all shares of Common Stock beneficially owned by Purchaser on any
shareholder proposal in accordance with the votes cast by holders of a
majority of the shares of Common Stock not held by Purchaser or its
affiliates."
(b) Section 4(g) of the Plan of Liquidation shall be renumbered as
Section 4(h), and the following shall be added as a new Section 4(g):
"(g) sell, transfer or otherwise dispose of any property to Purchaser
or any of its affiliates or to NorthStar Capital Investment Company or any
of its affiliates; or"
(c) Existing Section 5 of the Plan of Liquidation shall be numbered as
Section 5(a), and the following shall be added as new Sections 5(b), 5(c) and
5(d):
"(b) The Company shall (i) distribute to its stockholders all excess
refinancing proceeds, if any, by the earlier of (x) 30 days following the
end of the fiscal quarter in which such refinancing occurs and (y) 90 days
following the date of such refinancing and (ii) distribute to its
stockholders all net property sale proceeds, if any, by the earlier of (x)
30 days following the end of the fiscal quarter in which such sale occurs
and (y) 90 days following the date of such sale.
"(c) Unless otherwise approved by the holders of a majority of the
outstanding shares of Common Stock other than shares of Common Stock held
by Purchaser and its affiliates, and for so long as Purchaser's nominees to
the Board (or persons approved of or nominated by such nominees) comprise a
majority of the Board, if the Company fails to make any distribution
contemplated by Section 5(b) of this Plan of Liquidation, then (i)
Purchaser shall no longer be entitled to receive the fee contemplated by
Section 6(ii) of the Plan of Liquidation (in which case such amount shall
be distributed to holders of shares of Common Stock pursuant to Section
6(i) of this Plan of Liquidation) and (ii) until the Company makes such
distributions, (x) Purchaser and it affiliates shall not be entitled to
receive any service fees otherwise payable by the Company to Purchaser or
any of its affiliates and (y) directors of the Company (other than
directors who voted in favor of making such distributions or who formally
objected to the Company's not making such distributions) shall not be
entitled to receive any fees or other compensation otherwise payable to
them by the Company.
"(d) Cash reserves of the Company in excess of $500,000 will be
invested only in short-term U.S. Treasuries or other short-term federally
insured obligations."
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(d) The first sentence of Section 6 of the Plan of Liquidation shall be
deleted and replaced with the following two sentences:
"Subject to the payments and provisions of Section 5 above, Purchaser shall
receive a fee equal to 15% of the excess of (x) the Net Proceeds over (y)
the Base Amount, which shall only be payable from and after such time as
the Company has made aggregate distributions equal to the entire Base
Amount (as defined below) and which shall be payable simultaneously with
all future distributions made by the Company from and after the date on
which the Company has made aggregate distributions equal to the entire Base
Amount. Subject to the foregoing, all distributions made pursuant to this
Plan of Liquidation shall be made to holders of shares of Common Stock on a
pro rata basis."
(e) The second sentence of Section 7 of the Plan of Liquidation shall
be amended and restated in its entirety to read as follows:
"Thereafter, such fees shall be determined by a majority of the Independent
Directors; provided, however, that such fees shall not exceed $200,000 per
annum in the aggregate."
6. Representations and Warranties of the Company. The Company hereby
represents and warrants to Exeter and Purchaser that:
(a) The Company has all necessary power and authority to execute and
deliver this Amendment, to perform its obligations hereunder and under the Stock
Purchase Agreement and to consummate the Transactions; (b) the execution and
delivery of this Amendment by the Company and the consummation by the Company of
the Transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Amendment or to consummate the Transactions
(other than, with respect to the Dissolution and Plan of Liquidation, the
approval and adoption of the Dissolution and Plan of Liquidation by the holders
of a majority of the then-outstanding shares of Common Stock, and the filing and
recordation of appropriate documents as required by Delaware Law); and (c) this
Amendment has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by Exeter and Purchaser, constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
7. Representations and Warranties of Purchaser and Exeter. Exeter and
Purchaser hereby jointly and severally represent and warrant to the Company
that:
(a) Each of Exeter and Purchaser has all necessary power and authority
to execute and deliver this Amendment, to perform its obligations hereunder and
under the Stock Purchase Agreement and to consummate the Transactions; (b) the
execution and delivery of this Amendment by Purchaser and Exeter and the
consummation by Purchaser and Exeter of the Transactions have been duly and
validly authorized by all necessary action and no other proceedings on the part
of Purchaser or Exeter are necessary to authorize this Amendment or to
consummate the Transactions (other than, with respect to the Dissolution and
Plan of Liquidation, the filing and recordation of appropriate documents as
required by Delaware Law); and (c) this Amendment has been duly and validly
executed and delivered by Purchaser and
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Exeter and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Purchaser and
Exeter, enforceable against Purchaser and Exeter in accordance with its terms.
8. Effect on Agreement. (a) From and after the date hereof, each
reference in the Stock Purchase Agreement, the Settlement and Mutual Release
made and entered into as of July 1, 2002 between plaintiff Purchaser and the
additional plaintiffs who are listed on Exhibit A thereto, the defendants
Shelbourne I, Shelbourne II, Shelbourne III, Presidio Capital Investment
Company, LLC and Shelbourne Management, LLC, or any other agreement in
connection therewith to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Stock Purchase Agreement (including the Annexes thereto)
or the Plan of Liquidation, shall mean and be a reference to the Stock Purchase
Agreement (including the Annexes thereto) or the Plan of Liquidation as amended
by this Amendment.
(b) The Stock Purchase Agreement (including the Annexes thereto) as
specifically amended hereby and subject to the conditions herein, is and shall
remain in full force and effect and is in all respects ratified and confirmed.
9. Counterparts. This Amendment may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
10. Governing Law. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of Delaware applicable to contracts
executed in and to be performed in that State.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto to duly authorized, as of the
date first above written.
HX INVESTORS, L.P.
By: Exeter Capital Corporation,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
EXETER CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
SHELBOURNE PROPERTIES III, INC.
By: /s/ Xxxxxxx X. XxXxxxxx
------------------------------------
Name: Xxxxxxx X. XxXxxxxx
Title: Secretary
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